Korean Regulators Lay Down The Law For Cryptocurrency Exchanges

While there is a surge of interest in cryptocurrencies from South Korean investors, government regulators issue fines and conditions.

In what may emerge as a groundbreaking case of South Korean regulators imposing fines against a cryptocurrency exchange for data breach violations, BTC Korea.Com, operator of the Korea-based Bithumb exchange, has found itself in the crosshairs of the Korea Communications Commission (KCC).

As per a KCC statement:

« The punitive action was taken as the operator did not comply with protective steps, making it vulnerable to hacks and causing leaks of personal data and financial damage. »

The fine of 60 million won (nearly $54600) came as a result of Bithumb’s apparent insufficient protective measures to safeguard user data. According to a report in the Korea Herald, the exchange did not maintain its anti-virus software; nor did it encrypt private user data, which was stolen twice by hackers.

Amendments to a bill the government will soon submit to the National Assembly include bitcoin transaction regulations, as well as additional enforcement penalties. Bitcoin transactions will be permitted provided conditions are met that include deposit provenance, identity confirmation, explanations of obligations, cryptographic key security, and adherence to AML rules with an established protocol. Additional conditions will be provided via a forthcoming Presidential Decree.

Other regulatory changes will enact penalties for those who fail to comply, including « 10 years imprisonment, » with an increase in fines from 50 million won or less to a maximum of 500 million won.

As regulators continue to iron out the laws that will direct cryptocurrency markets in South Korea, an outright ban may be off the table.

Sources for this article were translated from Korean via Google Translate.

Jeremy Nation is a writer living in Los Angeles with interests in technology, human rights, and cuisine. He is a full time staff writer for ETHNews and holds value in Ether.